Tuesday, June 27, 2017

Unexpected news moves Wall Street

Unexpected news in Crude Oil and T-Bonds

A very special day today on Wall Street, those with unexpected news that move the entire market, commodities and different industrial sectors, and set the pattern of those who can continue in the following days. It is from those days where I prefer not to trade and observe the panorama with patience. Let's see:

- The crude oil /CL resumed the rise (today + 2%) exceeding $44, this time for reasons different from the usual: the news of a fierce cyber attack to the systems of the Maersk shipping company and the largest Russian oil company, Rosneft, moved the price of crude immediately. Without even knowing the details, there is already talk of a WannaCry virus, which attacked the entire cybernetic world in May. And tomorrow comes the weekly report of the EIA and Rig Count, another reason to wait before trading.

- After many weeks, the rate of 10-year Treasury Bonds TNX had a good rise (today +2.85%), almost 7 basis points (following the line of European stock exchanges where the increases were 14 points in France and 13 points in Germany), as a result of Draghi's unexpectedly hawkish comments, which were understood as the early end of the QE. To this is added a poor 5-year bond auction, with high-yield and buy/cover values ​​almost similar to the previous month, reflecting little interest in them. Already in a previous post commented on this possibility of rise, is more, I think will continue to give more steep to the curve of rates.

Second strong tech sell-off in less than 3 weeks

The Nasdaq closed today -1.61%, first time below its SMA50 since December, caused this time by the fine of 2.420 million euros imposed on Google GOOG (today -2.62%) by the European Commission for altering search results to favor. Bad regulation such a regulation, and of course Google is already in the process of appeal. How will the Nasdaq come next: Buy the dip? or more downside? I suggest also wait.

Curious divergence between the Finance and the Nasdaq-100 sectors throughout this month. They are the most popular Wall Street and do not usually follow that behavior.

Health Bill postponed

- The Health Bill reform was postponed by the Senate, which took strength from that sector XLV -0.91% and other annexes such as Biotech XBI -3.53%, and again doubts if the ambitious Trump proposals, that lifted the market to successive all-time highs, will really succeed in being approved. Read: tax cuts, infrastructure expenses, deregulations, etc. - Consequence of everything described above, the VIX volatility index that had been hovering and below 10 points, reacted to the upside today, +11.72%, which means paying attention on the following days, as the complacency of the market may be decreasing, and a rotation of sectors may be starting.

The protagonists of today's session, in my opinion, the most important of themonth in the world markets, because they will mark their route in the coming days.